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Glimmer of hope for Harvey Norman after NZ results

01 Mar 13

New Zealand has been Harvey Norman's standout performer for the first half of fiscal 2013, at least in terms of percentage increases in sales, which were up 3.6% on the same period a year ago.

Like for like sales growth for New Zealand increased 2.3%.

The New Zealand figures were a glimmer of hope in what was otherwise fairly grim reading, with the retailer recording a 36.5% drop in profit after tax for H1 of FY13, ending December 31, dropping to AU$81.9 million, down from AU$128.9 the previous year.

That drop was blamed largely on property revaluation of $31.5 million after tax. Excluding the property decrement would see net profit after tax down 6.2% to $113.4 million.

Total sales for the six months to December fell 7.3% on the previous year, to AU$2.88 billion. Revenue from the New Zealand company-operated stores was up NZ$10.4 million, or 2.9%, thanks to the reopening of the main complex in Christchurch, damaged in the earthquakes.

Translated into Australian dollars there was a sales revenue increase of 3.6%. The company says it was particularly pleasing to see the solid result even when compared to the strong sales recorded last period following the hosting of the Rugby World Cup.

The Kiwi year began with a Q1 drop of 1.3% on the same period the previous year, but rebounded with a 7.9% increase for Q2.

Slovenia/Croatia was the only other region to record a sales increase for the half year, coming in at 2.1% after a wildly fluctuating 26.3% increase in Q1, followed by a 12.3% decrease in Q2, compared with the same period the previous year.

The company has 32 stores across New Zealand. Harvey Norman chairman Gerry Harvey was keen to put a positive spin on things, saying the company is seeing improvements.

“The aggressive discounting experienced in the second half of 2012 has stabilised and pleasingly we are seeing an uptick in sales,” he says.

“Interest raters are at historical lows which should start moving the consumer back into the buying cycle from the savings cycle.

"Harvey Norman will be a beneficiary of this, given the diverse homemaker categories Harvey Norman franchisees operate in.”

The company says Australian sales for January 2013 are up 4.1%, with global sales for the month up 3.8%.

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